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Mr Dilip Modi, President of Assocham , has said that the step to reduce CRR by 50 basis points will give requisite impetus to industry to undertake capacity expansion and facilitate credit flow to industry. Reduction of CRR strikes a fine balance between containing core inflation and mitigating downside risk to growth, he said.
Mr D.R. Dogra, MD and CEO of CARE Ratings Ltd , said that the RBI has adopted a two-pronged strategy to tackle the inflation-growth trade-off on the one hand and the management of fiscal balances on the other. He said the proposal to deregulate diesel is a challenge politically, socially and economically.
Mr Chaitanya Pande, Head, Fixed Income, ICICI Prudential AMC , said that the 50 bps CRR cut is intended to boost systemic liquidity. The policy statement, however, has clearly reinforced the need for fiscal consolidation and further moderation of inflation to consider any rate action. He said that further guidance is expected to come post-budget. “We continue to believe that the RBI will look to initiate a rate cut only in the next fiscal,” he said.
Mr Indranil pan, Chief Economist of Kotak Mahindra Bank , said that the RBI now appears to be more concerned about growth though it maintains that the inflation trajectory could face upside risks. “We maintain our base case that the first repo rate cut of 25 bps could be coming up in April, but would not totally rule out a probability of a rate cut in mid-quarter policy review on March 15.”
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